Brazil
Overthrowing Dilma Rousseff: It’s Class War, and Their Class is Winning
The judicial coup against President Dilma Rousseff is the culmination of the deepest political crisis in Brazil for 50 years.
Every so often, the bourgeois political system runs into crisis. The machinery of the state jams; the veils of consent are torn asunder and the tools of power appear disturbingly naked. Brazil is living through one of those moments: it is dreamland for social scientists; a nightmare for everyone else.
Dilma Rousseff was elected President in 2010, with a 56-44 per cent majority against the right-wing neoliberal PSDB (Brazilian Social Democratic Party) opposition candidate. She was re-elected four years later with a diminished yet convincing majority of 52-48 per cent, or a difference of 3.5 million votes.
Dilma’s second victory sparked a heated panic among the neoliberal and US-aligned opposition. The fourth consecutive election of a President affiliated to the centre-left PT (Workers’ Party) was bad news for the opposition, among other reasons because it suggested that PT founder Luís Inácio Lula da Silva could return in 2018. Lula had been President between 2003 and 2010 and, when he left office, his approval ratings hit 90 per cent, making him the most popular leader in Brazilian history. This threat of continuity suggested that the opposition could be out of federal office for a generation. They immediately rejected the outcome of the vote. No credible complaints could be made, but no matter; it was resolved that Dilma Rousseff would be overthrown by any means necessary. To understand what happened next, we must return to 2011.
Dilma inherited from Lula a booming economy. Alongside China and other middle-income countries, Brazil bounced back vigorously after the global crisis. GDP expanded by 7.5 per cent in 2010, the fastest rate in decades, and Lula’s hybrid neoliberal-neodevelopmental economic policies seemed to have hit the perfect balance: sufficiently orthodox to enjoy the confidence of large sections of the internal bourgeoisie and the formal and informal working class, and heterodox enough to deliver the greatest redistribution of income and privilege in Brazil’s recorded history. For example, the real minimum wage rose by 70 per cent and 21 million (mostly low-paid) jobs were created in the 2000s. Social provision increased significantly, including the world-famous Bolsa Família conditional cash transfer programme, and the Government supported a dramatic expansion of higher education, including quotas for blacks and state school pupils. For the first time, the poor could access education as well as income and bank loans. They proceeded to study, earn and borrow, and to occupy spaces, literally, previously the preserve of the upper-middle class: airports, shopping malls, banks, private health facilities and roads, with the latter clogged up by cheap cars purchased on 72 easy payments. The Government enjoyed a comfortable majority in a highly fragmented Congress, and Lula’s legendary political skills managed to keep most of the political elite on side.
Then everything started to go wrong. Dilma Rousseff was chosen by Lula as his successor. She was a steady pair of hands and a competent manager and enforcer. She was also the most left-wing President of Brazil since João Goulart, who was overthrown by a military coup in 1964. However, she had no political track record and, it will soon become evident, lacked essential qualities for the job.
Once elected, Dilma shifted economic policies further away from neoliberalism. The Government intervened in several sectors seeking to promote investment and output, and put intense pressure on the financial system to reduce interest rates, which lowered credit costs and the Government’s debt service, releasing funds for consumption and investment. A virtuous circle of growth and distribution seemed possible. Unfortunately, the Government miscalculated the lasting impact of the global crisis. The US and European economies stagnated, China’s growth faltered, and the so-called commodity super-cycle vanished. Brazil’s current account was ruined. Even worse, the US, UK, Japan and the Eurozone introduced quantitative easing policies that led to massive capital outflows towards middle-income countries. Brazil faced a tsunami of foreign exchange, that overvalued the currency and bred deindustrialisation. Economic growth rates fell precipitously.
The Government doubled its interventionism through public investment, subsidised loans and tax rebates, which ravaged the public accounts. Their frantic and seemingly random interventionism scared away the internal bourgeoisie: local magnates were content to run Government through the Workers’ Party, but would not be managed by a former political prisoner who overtly despised them. And her antipathy was not only reserved for the capitalists: the President had little inclination to speak to social movements, left organisations, lobbies, allied parties, elected politicians, or her own ministers. The economy stalled and Dilma’s political alliances shrank, in a fast-moving dance of destruction. The neoliberal opposition scented blood.
For years, the opposition to the PT had been rudderless. The PSDB had nothing appealing to offer while, as is traditional in Brazil, most other parties were gangs of bandits extorting the Government for selfish gain. The situation was so desperate that the mainstream media overtly took the mantle of opposition, driving the anti-PT agenda and literally instructing politicians what to do next. In the meantime, the radical left remained small and relatively powerless. It was despised by the hegemonic ambitions of the PT.
The confluence of dissatisfactions became an irresistible force in 2013. The mainstream media is rabidly neoliberal and utterly ruthless: it is as if Fox News and its clones dominated the entire US media, including all TV chains and the main newspapers. The upper-middle class was their obliging target, as they had economic, social and political reasons to be unhappy. Upper-middle class jobs were declining, with 4.3 million posts paying between 5 and 10 minimum wages vanishing in the 2000s. In the meantime, the bourgeoisie was doing well, and the poor advanced fast: even domestic servants got labour rights. The upper-middle class felt squeezed economically, and excluded from their privileged spaces. It was also dislocated from the state. Since Lula’s election, the state bureaucracy had been populated by thousands of cadres appointed by the PT and the left, to the detriment of ‘better-educated’, whiter and, presumably, more deserving upper-middle class competitors. Mass demonstrations erupted for the first time in June 2013, triggered by left-wing opposition against a bus fare increase in São Paulo. Those demonstrations were fanned by the media and captured by the upper middle-class and the right, and they shook the Government – but, clearly, not enough to motivate them to save themselves. The demonstrations returned two years later. And then in 2016.
Now, reader, follow this. After the decimation of the state apparatus by the pre-Lula neoliberal administrations, the PT sought to rebuild selected areas of the bureaucracy. Among them, for reasons that Lula may soon have plenty of time to review and to regret, the Federal Police and the Federal Prosecution Office (FPO). In addition, for overtly ‘democratic’ reasons, but more likely related to corporatism and capacity to make media-friendly noises, the Federal Police and the FPO were granted inordinate autonomy; the former through mismanagement, while the latter has become the fourth power in the Republic, separate from – and checking – the Executive, the Legislature and the Judiciary. The abundance of qualified jobseekers led to the colonisation of these well-paying jobs by upper-middle class cadres. They were now in a constitutionally secure position, and could chew the hand that had fed them, while loudly demanding, through the media, additional resources to maul the rest of the PT’s body.
Corruption was the ideal pretext. Since it lost the first democratic presidential elections, in 1989, the PT moved steadily towards the political centre. In order to lure the upper-middle class and the internal bourgeoisie, the PT neutralised or expelled the party’s left wing, disarmed the trade unions and social movements, signed up to the neoliberal economic policies pursued by the previous administration, and imposed a dour conformity that killed off any alternative leadership. Only Lula’s sun can shine in the party; everything else was incinerated. This strategy was eventually successful and, in 2002, ‘Little Lula Peace and Love’ was elected President. (I kid you not, reader: this was one of his campaign slogans.)
For years the PT had thrived in opposition as the only honest political party in Brazil. This strategy worked, but it contained a lethal contradiction: in order to win expensive elections, manage the Executive and build a workable majority in Congress, the PT would have to get its hands dirty. There is no other way to ‘do’ politics in Brazilian ‘democracy’.
We only need one more element, and our mixture will be ready to combust. Petrobras is Brazil’s largest corporation and one of the world’s largest oil companies. The firm has considerable technical and economic capacity, and it was responsible for the discovery, in 2006, of gigantic ‘pre-salt’ deep sea oilfields hundreds of miles from the Brazilian coast. Dilma Rousseff, as Lula’s Minister of Mines and Energy, was responsible for handling exploration contracts in these areas including large privileges for Petrobras. The enabling legislation was vigorously opposed by PSDB, the media, the oil majors and the US Government.
In 2014, Sergio Moro, a previously unknown judge in Curitiba, a Southern state capital, started investigating a currency dealer involved in tax evasion. This case eventually spiralled into a deadly threat against Dilma Rousseff’s Government. Judge Moro is good-looking, well-educated, white and well-paid. He is also very close to the PSDB. His Lavajato (Carwash) operation unveiled an extraordinary tale of large-scale bribery, plunder of public assets and funding for all major political parties, centred on the relationship between Petrobras and some of its main suppliers – precisely the stalwarts of the PT in the oil, shipbuiding and construction industries. It was the perfect combination, at the right time. Judge Moro’s cause was picked up by the media, and he obligingly steered it to inflict maximum damage on the PT, while shielding the other parties. Politicians connected to the PT and some of Brazil’s wealthiest businessmen were summarily jailed, and would remain locked up until they agreed a plea bargain implicating others. A new phase of Lavajato would ensnare them, and so on. The operation is now in its 26th phase; many have already collaborated, and those who refused to do so have received long prison sentences, to coerce them back into line while their appeals are pending. The media turned Judge Moro into a hero; he can do no wrong, and attempts to contest his sprawling powers are met with derision or worse. He is now the most powerful person in the Republic, above Dilma, Lula, the speakers of the Chamber of Deputies and the Senate (both sinking in corruption and other scandals), and even the Supreme Court Justices, who have either been silenced or are quietly supportive of Moro’s crusade.
Petrobras has been paralysed by the scandal, bringing down the entire oil chain. Private investment has collapsed because of political uncertainty and the politically-driven investment strike against Dilma’s Government. Congress has turned against the Government, and the Judiciary is overwhelmingly hostile. After years of sniping, the media has been delighted to see Lula fall under the Lavajato juggernaut, even if the allegations are often far-fetched: does he actually own a beach-side apartment that his family does not use, is that small farm really his, who paid for the lake and the mobile phone masts nearby, and how about those pedalos? No matter: in a display of bravado and power, Moro even detained Lula for questioning on 4 March. He was taken to São Paulo airport and would have been flown to Curitiba, but the Judge’s plan was halted by fear of the political fallout. Lula was questioned at the airport, then released. He was livid.
In order to shore up her crumbling administration and protect Lula from prosecution, Dilma Rousseff appointed Lula her Chief of Staff (the President’s Chief of Staff has ministerial status and can be prosecuted only by the Supreme Court). The right-wing conspiracy went into overdrive. Moro (illegally) released the (illegal) recording of a conversation between President Dilma and Lula, pertaining to his investiture. Once suitably misinterpreted, their dialogue was presented as ‘proof’ of a conspiracy to protect Lula from Moro’s determination to jail him. Large right-wing upper-middle class masses poured into the streets, furiously, on 13 March. Five days later, the left responded with not quite as large demonstrations of its own against the unfolding coup. In the meantime, Lula’s appointment was suspended by a judicial measure, then restored, then suspended again. The case is now in the Supreme Court. At the moment, he is not a Minister, and his head is posed above the block. Moro can arrest him at short notice.
Why is this a coup? Because, despite aggressive scrutiny no Presidential crime warranting impeachment proceedings has emerged. Nevertheless, the political right has thrown the kitchen sink at Dilma Rousseff. They rejected the outcome of the 2014 elections and appealed against her alleged campaign finance violations, which would remove from power both Dilma and Vice-President Michel Temer, now the effective leader of the impeachment drive (and strangely enough, this case has been parked). The right simultaneously started impeachment procedures in Congress. The media has attacked the Government viciously, neoliberal economists ‘impartially’ beg for a new administration ‘to restore market confidence’, and the right will resort to street violence as necessary. Finally, the judicial charade against the PT has broken all the rules of legality, yet it is cheered on by the media, the right and even by the Supreme Court Justices.
Yet… the coup de grâce is taking a long time coming. In the olden days, the military would have already moved in. Today, the Brazilian military are defined more by their nationalism (a danger to the neoliberal onslaught) than by their right-wing faith and, anyway, the Soviet Union is no more. Under neoliberalism, coups d’état must follow legal niceties, as was shown in Honduras, in 2009, and in Paraguay, in 2012.
Brazil is likely to join their company, but not just now: large sections of capital want to restore the hegemony of neoliberalism; those who once supported the PT’s national development strategy have fallen into line; the media is howling so loudly it has become impossible to think clearly, and most of the upper-middle class has descended into a fascist odium for the PT, the left, the poor, and blacks. Their disorderly hatred has become so intense that even PSDB politicians are booed in anti-Government demonstrations. And, despite the relentless attack, the left remains reasonably strong, as was demonstrated on 18th March. The right and the elite are powerful and ruthless – but they are also afraid of the consequences of their own daring.
There is no simple resolution to the political, economic and social crises in Brazil. Dilma Rousseff has lost political support and the confidence of capital, and she is likely to be removed from office in the coming days. However, attempts to imprison Lula could have unpredictable implications and, even if Dilma and Lula are struck off the political map, a renewed neoliberal hegemony cannot automatically restore political stability or economic growth, nor secure the social prominence that the upper-middle class craves. Despite strong media support for the impending coup, the PT, other left parties and many radical social movements remain strong. Further escalation is inevitable. Watch this space.
Democracy in the Crucible: Impeachment or Coup d’État in Brazil?
As first posted on E-International Relations, Brazil is the world’s sixth largest economy, a prominent member of the G-20 and the BRICS group of large emerging countries, and the host of the 2014 Football World Cup and the 2016 Summer Olympics. The country has also attracted attention since the Presidential election of PT (Workers’ Party) candidates Luís Inácio Lula da Silva, in 2002 and 2006, and Dilma Rousseff, in 2010 and 2014. Their administrations have played a leading role in the Latin American ‘Pink Tide’; Brazil has also achieved considerable gains in employment and distribution, and was one of the few nations where social spending rose in the current ‘Age of Neoliberalism’.
Yet, Brazil finds itself enmeshed in the worst economic contraction in a generation, coupled with a political deadlock fuelled by a parade of corruption scandals. A particularly grotesque one has engulfed the Speaker of the Chamber of Deputies, who is struggling for his political life while, simultaneously, leading impeachment procedures against President Rousseff. Even if her administration survives, Rousseff is unlikely to regain the ability to pass legislation through a bitterly hostile Congress, further impairing the country’s economic prospects.
This is calamitous for Brazil, and potentially lethal for the PT. At the end of his second administration, Lula enjoyed approval rates bordering on 90 per cent, and Dilma Rousseff’s approvals hovered around 70 per cent until 2013. The collapse has been relentless: her popularity is now stuck in single digits. There is profound cross-class discontent, a mass-based political right has emerged for the first time since the 1960s, and the mainstream media has been promoting a vicious campaign against the PT and anything approaching even social democracy. If they succeed, there may be a long-term shift to the right in the largest country in Latin America.
Lula’s search for political hegemony
The forces driving today’s economic and political crises can be traced back to the incompatibility between two transitions taking place in last 30 years: the political transition from military rule to democracy, that was sealed by the progressive Constitution of 1988, and the economic transition from import-substitution industrialisation to neoliberalism, that was consolidated by the macroeconomic policy ‘tripod’ imposed in 1999, including inflation targeting and Central Bank independence, liberalisation of capital flows, and permanently contractionary fiscal and monetary policies.
The Constitution is socially inclusive; it has democratised and decentralised power and mandated the creation of a Swedish-style welfare state, including extensive social rights and income guarantees. In contrast, neoliberalism promotes the interests of internationalised capital in general and finance in particular, concentrates economic and political power and imposes an exclusionary democracy cloaked as ‘macroeconomic stability’. The friction between incompatible principles of social organisation – democracy or neoliberalism – helps to explain both the election of Lula, and the destruction of his successor.
Correspondingly, for 25 years Brazilian political life has been structured by the conflict between the social-democratic PT and the hardline neoliberal Social Democratic Party, PSDB. In Poulantzian fashion, these parties are closely aligned with two fractions of capital. Domestic capital is based primarily on construction, shipbuilding, the capital goods industry, agribusiness and national banks. They have supported the PT in exchange for subsidised state finance and institutional protection supporting their complex relationship of competition and co-operation with global capital. Internationalised capital includes foreign firms and their associates across finance, insurance, globally-integrated manufacturing and the mainstream media which, although overwhelmingly owned by domestic capital, is committed to neoliberalism and rejects the notion of a ‘national’ development strategy. This group is represented by the PSDB.
The PT administrations promoted the interests of domestic capital and the workers with considerable success during the period of prosperity afforded by the commodity boom pulled by the USA and, subsequently, by China. For example, these administrations supported the expansion of the oil chain through the state-owned Petrobras, the country’s largest firm; the shipbuilding industry recovered from the disaster imposed in the 1990s by the PSDB administration of F.H. Cardoso that reduced it to 5,000 workers. Under Lula, profits ballooned and employment in the shipyards rose to 105,000. The PT administrations reduced real interest rates from a peak of 22 per cent, under Cardoso, to 3 per cent, under Dilma, and dramatically expanded subsidised finance through the Brazilian Development Bank (BNDES), that became the largest development bank in the world.
These governments also benefitted the organised workers and the poor, both indirectly through the expansion of the economy, and directly through the government’s wage, employment and transfer policies. The minimum wage rose by 72 per cent in real terms between 2005 and 2012, and social provision increased through pensions, benefits and the flagship Bolsa Família cash transfer programme. Economic prosperity and a supportive administration also facilitated social struggles. There were around 300 strikes in 2003, and less than 20 per cent of collective actions led to real wage gains; in 2013 there were 2,000 strikes, and 95 per cent of agreements increased real wages.
Yet social and economic achievements did not create a stable political hegemony. For example, the PT and its close allies never controlled more than one-third of seats in Congress. Instead, they always depended on broad alliances with unreliable parties and opportunistic groups in order to pass legislation. In the meantime, the mainstream media remained ravenously hostile to Lula and Dilma, often orchestrating the parliamentary opposition. The Judiciary is also firmly aligned with the political right. Finally, corruption remains an essential link between politics and business life. Thievery and underhand transfers supplement the machinery of the state, democratic processes and the institutional modalities of representation of the elite. It is only natural that, in the 1990s, the PT decided that in order to win elections instead of being honourably defeated, it needed to begin distributing favours to its business supporters, and reward unprincipled politicians in exchange for their support. There is no other way to govern the country. These crooked circumstances were incompatible with political coherence, and the PT was always tripping on the verge of calamity.
The favourable winds of the global commodity boom supported Lula’s programme of income distribution, but his economic ambitions were constrained by the neoliberal policy tripod. Fiscal and monetary austerity, large capital movements and incoherent industrial policies overvalued the currency and promoted economic precarisation. Brazil created millions of jobs in the 2000s, but they were mostly precarious and poorly paid posts in urban services. Infrastructure funding was always lagging, creating a yawning gap between rising consumption levels within the household and the provision of public goods and services, especially transport, water, sanitation, security, schooling and health. Mass frustration crept in. In the meantime, the upper middle classes felt increasingly alienated from the government, because of their exclusion from power and the feeling that ‘their’ taxes were funding feckless hordes and arrogant arrivistes, who insisted on their right of admission to shopping centres, airports and private clinics.
Brazil recovered rapidly from the global crisis through bold monetary and fiscal policies. However, the scope for success was limited because growth was driven by commodity exports, for which demand was bound to decline, backed up by fickle capital inflows. Since the economy is permanently hampered by the neoliberal policy tripod, if the external engine splutters domestic growth will falter, regardless of fiscal tweaks or bombastic attacks on corruption. If, in addition, the government is isolated politically, demoralised, and beset by an investment strike, the economy must fall off a cliff. Let us see how it happened.
The cracks are showing: Dilma’s fall, and the emboldening of the Right
Dilma Rousseff was never a politician, nor was she a member of the PT until recently. She was a manager and a fixer, and was offered the Ministry of Energy in 2003. There, she oversaw the massive expansion of the country’s oil industry. She subsequently became President Lula’s Chief of Staff. Dilma succeeded in both posts and Lula, at the height of his powers, anointed her PT candidate to his succession.
Once elected, Dilma tilted economic policy further away from neoliberalism. She introduced more expansionary fiscal policies, lowered interest rates, imposed marginal capital controls, funded additional state investment, expanded transfers and intervened in multiple sectors. The outcome was ruinous. The government expected the global crisis to peter out but, instead, it deepened. Quantitative easing in the advanced economies wreaked havoc with the Brazilian real; the media intensified its attacks, and domestic capital refused to invest since it could neither control the government nor claim easy profits. The current account deficit ballooned, and the economy tanked. The government lost the ability to conciliate conflicting interests. The urban poor rebelled in 2013, but their protests were hijacked by the right-wing media and a bitterly hostile upper middle class.
Dilma campaigned for re-election with a left-wing message, warning against the neoliberal adjustment planned by her PSDB rival. However, once victorious, Dilma appointed as Finance Minister a banker connected to the PSDB, and gave him free rein to restore the government’s ‘credibility’ through a sharp fiscal and monetary contraction. The left cried foul, and Rousseff’s working class supporters felt betrayed. The retraction of demand during a protracted global crisis triggered the collapse of investment. Output nose-dived and unemployment mounted. The economy contracted 3.5 per cent in 2015, and 2016 can be just as bad. The gains from the 2000s are being wiped out as we speak. International capital is waiting for Dilma’s fall; domestic capital is cowering, and the formal sector workers are dumbfounded by their losses. The informal workers suffer heavily, through the evaporation of opportunities for income, employment, education and social advancement.
The media, the (PSDB-controlled) Federal Police and the Judiciary tightened the screws in 2014, and successive corruption scandals have come to light. The Federal Police’s ongoing Lava Jato operation has unveiled a large corruption network centred on Petrobras and including cartels, fraud and illegal funding for several parties. Blanket media coverage focusing on the PT alone badly dented the government’s credibility. Several politicians and party cadres were jailed, followed by some of the country’s most prominent businessmen, but only those supporting the government. A two-pronged campaign was launched to restore the right to power regardless of the elections. On the one hand, the media suggested that the PT was uniquely corrupt and corrupting, and that the businesses aligned with it had violated the law and perverted democracy. On the other hand, the police and the judicial system have sought to throttle the party. The message was clear: anyone funding the PT illegally will be imprisoned; their companies will be destroyed and the shareholders will pay dearly. Having survived for years through the favours of the rich at the expense of the militancy of the poor, the PT was in a bind. It had no explanation to offer, no programme to advance, and no strategy to climb out of the hole.
The attack against Rousseff and the PT forged a right-wing mass opposition demanding the ‘end of corruption’ and ‘Dilma’s impeachment’, even though there is no legal justification for it. Examination of the opposition’s grievances leads to a laundry list of unfocused and conflicting dissatisfactions articulated by expletives rather than logic: the demand for the President’s impeachment has no legal substance. The process is an attempted political coup d’état: the PSDB and the media refuse to accept the outcome of the 2014 elections and they have decided to depose the President and restore the hegemony of globalised neoliberalism regardless of Constitutional niceties.
At this point in time, it is impossible to predict whether or not Dilma will be impeached or forced to resign. Underpinning this uncertainty is the impasse between social forces defending an inclusive Constitution and those imposing an excluding neoliberal system of accumulation. These disputes emerge through a dysfunctional political system, a distorted economy and a regressive social structure: a democracy without legitimate sources of party funds, a hollowed out manufacturing base supported by large-scale agribusiness, an economy without prospects of generating quality jobs for its workers or capacity to distribute income in a fiscally sustainable manner, and élites clinging to their privileges and resenting any attempt to build an inclusive citizenship. A political hegemony resolving these impasses will not be built easily or rapidly. The agony is not over. The end is not even close.
The set image is by thierry ehrmann [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons.